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I am a business owner and would like to determine if the following is under ERISA, COBRA, Group benefits, or even legal?

Dallas, TX |

I do not want to deal with ERISA, COBRA, laws related to group benefits, or things like that. Especially now that Obamacare is rolling out, employees can get their own health insurance. Roth IRAs are the best bet for employees who make under a certain yearly amount. I want to incentivize them to get their own health insurance.
1) Give a yearly taxable bonus to my employees for obtaining their own health insurance? is this under Cobra or ERISA?
2) Give a matching taxable bonuse up to a certain amount to employees for contributing to their own Roth IRA?
3) Give a matching taxable bonus to employees for getting their own term life insurance? (so i don't deal with it)
4) Give a matching taxable bonus up to a certain amount if the employee contributes to a 529?

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Attorney answers 4


Is truly beyond what you can expect for free on a blog.....but I will tell you that COBRA is not relevant at all unless an employee severed employment. ERISA wil usually not apply to a "bonus" plan. I think most of your issues are IRS related as you may be thinking about a tax qualified plan for matchingntype contributions in which case it will draw you back into the ERISA realm notwithstanding mybearlier comment about bonus plans. You need the advice of an employee benefit firm as well as a tax lawyer to assist you in fleshing out your primary goals within the parameters you have espoused.

My answer is not intended to be giving legal advice and this topic can be a complex area where the advice of a licensed attorney in your State should be obtained. Please click "helpful" or "best answer" if my answer added any value or add a "comment" if you have more info for me to help you get a better answer.


I agree this does not fall under COBRA, but you may be creating a payroll related type benefit. Because of the many implications under the Internal Revenue Code and ERISA you definitely need to contact a labor law firm that assists employers in designing plans. This must be set up right or your headaches may only be increased. As an employer you do want to create the right incentives, but when you create a payroll or benefit plan of some type it adds fiduciary obligations. Thigs may not be as simple as you envision. Best of wishes on this.

More facts need to be known so do not rely on comments here until consuting with an attorney that practices regularly in this area of law.


As the other attorneys have mentioned, this question is well, well beyond the scope of what can or should be answered over a free question site. You need to speak with an ERISA attorney about these questions and pay for the attorney to provide an advisory letter on these issues. The potential tax penalties, ERISA penalties and other legal liabilities would likely far outweigh the cost of hiring a lawyer to help you.


Let me add my voice to the chorus of attorneys telling you to consult with an experienced employee benefits attorney. These issues are far too complex for an online forum. Additionally, some of the schemes you're discussing may not be feasible under the PPACA ("Obamacare"), depending on the number of employees you have. If you want to avoid Federal entanglements, spend the money now and sit down with an ERISA lawyer. Go over your corporate structure and your goals with the attorney and allow him/her to give you real advice tailored to your specific situation and objectives.

Good luck.

Your question has been answered as a courtesy. This is not paid legal advice. Nothing in this communication is intended to create an attorney-client relationship. Unless expressly stated otherwise, nothing contained in this message should be construed as a digital or electronic signature, nor is it intended to reflect an intention to make an agreement by electronic means.

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